Credit Karma, a widely used credit monitoring service, recently faced a Federal Trade Commission (FTC) settlement over misleading “pre-approved” credit card offers. Between February 2018 and April 2021, users who responded to these offers but were later denied credit are now eligible for a $49 payout from the $2.5 million settlement. If you were affected, this guide will walk you through the steps to check your eligibility, claim your payment, and protect yourself from similar issues in the future.
Overview of the Credit Karma Settlement
Settlement Name: Credit Karma FTC Settlement
Eligibility: Consumers who responded to a “pre-approved” credit card offer from Credit Karma between February 2018 and April 2021, and were subsequently denied credit
Payment Amount: $49
Total Settlement Value: $2.5 million
Payment Method: Checks and PayPal
Deadline to Cash Checks: 90 days from receipt
Deadline to Accept PayPal Payment: 30 days from receipt
Official Website: FTC Credit Karma Settlement Information
If you received a misleading “pre-approved” offer from Credit Karma and were denied credit afterward, you could be eligible to receive a $49 payment. Be on the lookout for communications from the FTC or the settlement administrator, and avoid falling for scams by relying only on official notices.
What is the Credit Karma Settlement About?
The FTC’s lawsuit against Credit Karma centers on deceptive marketing practices. The company was accused of promoting certain credit card offers as “pre-approved,” even though many consumers who responded to these offers were ultimately denied credit. This caused frustration, wasted time, and potentially harmed credit scores due to unnecessary credit inquiries.
Why Did Credit Karma Settle?
Credit Karma, known for offering free tools like credit scores and credit card recommendations, became popular with millions of users. However, an investigation by the FTC uncovered complaints that Credit Karma misled users with its “pre-approved” credit card offers. Around one-third of those who clicked on these offers were denied credit, prompting the FTC to step in. Rather than face prolonged litigation, Credit Karma agreed to a $2.5 million settlement, allowing affected consumers to receive $49 each.
This settlement is part of the FTC’s broader effort to protect consumer rights and ensure truthful advertising in financial services. As part of the settlement, Credit Karma also agreed to modify its marketing practices, ensuring clearer communication about approval odds for financial offers.
Am I Eligible for the Settlement Payment?
You may be eligible to receive $49 if you meet the following criteria:
- You used Credit Karma between February 2018 and April 2021.
- You responded to a “pre-approved” credit card offer from Credit Karma.
- You were later denied credit despite the “pre-approved” label.
Eligible individuals should have received notifications from the FTC or the refund administrator outlining the next steps. If you haven’t received any communication but believe you qualify, you can contact the refund administrator at 1-866-848-0871 for assistance.
How to Claim Your $49 Settlement Payment
If you’re eligible to claim your settlement, here’s what you need to do:
- Look for Official Communications: Check your email or mail for details from the FTC or the settlement administrator about how to claim your payment.
- Choose Your Payment Method: You can select between a check or a PayPal payment.
- Cash Your Check: If you choose to receive a check, be sure to cash it within 90 days of receiving it.
- Accept Your PayPal Payment: If you select PayPal, accept the payment within 30 days of receipt.
- Act Quickly: Once you get your payment, deposit it promptly to avoid any expiration issues.
- Beware of Scams: Only trust communications from the FTC or the settlement administrator. Be cautious about third-party services claiming to help with the settlement.
The Impact of Misleading Credit Offers
The consequences of misleading “pre-approved” offers go beyond frustration. In many cases, unnecessary credit inquiries can slightly reduce your credit score. Even if the impact is minimal, these inquiries stay on your credit report for up to two years. Additionally, these deceptive offers can waste your time and cause unnecessary stress, leading to a feeling of mistrust in financial institutions.
Why This Settlement Matters
Misleading credit offers, especially those labeled as “pre-approved,” can have long-lasting effects. They not only cause frustration but can also impact your credit score and overall financial health. By holding companies like Credit Karma accountable, the FTC is ensuring consumers have access to honest and transparent financial information.
How to Protect Yourself from Misleading Offers in the Future
To avoid being misled by similar offers in the future, it’s essential to be cautious and stay informed:
- Read the Fine Print: Always look past the “pre-approved” or “guaranteed” labels and carefully review the approval criteria before responding to any offer.
- Monitor Your Credit: Regularly check your credit report using services like annualcreditreport.com to stay aware of any unauthorized inquiries.
- Understand the Impact of Credit Inquiries: Before applying for any credit, make sure you understand how it may impact your score.
- Rely on Trusted Sources: Stick to reputable credit monitoring services and official websites, such as the FTC or the Consumer Financial Protection Bureau (CFPB), for reliable advice.
By following these tips and staying informed, you can protect your credit and avoid falling victim to misleading financial offers in the future.
